I worked in marketing for a leading hospitality business for many years so Black Friday is a term that I have been familiar with for some time. Back then it was an industry term to describe the last Friday before Christmas when typically, we would see the most Christmas party bookings. Since then, much like Halloween and Baby Showers we have taken the lead from our American counterparts. Black Friday has become a day when retailers heavily discount their products to encourage consumers to purchase, giving businesses a much needed pre-Christmas boost. We’ve even gone one step further with Cyber Monday. But does Black Friday actually boost businesses sales or are we simply cannibalising existing sales? In my latest blog I’ll take a look at the benefits of Black Friday vs the potential pitfalls.
Black Friday this year will fall on Friday the 26th of November. So, if you’re looking to capitalise on this day, you’ve not got much time to get your ducks lined up. Last year we spent an estimated £6 billion on Black Friday and Cyber Monday. Forecasts suggest that this year spending will be down by 6% with the average Brit set to spend £275 (finder.com). So why the sudden downturn in projected sales? The easing of lockdown and vaccine rollout may hold the key to the predicted decline in sales. With life almost returning to pre-pandemic status consumers have more demands on their income. Money is getting spent on socialising, commuting and non-essentials. Concerns over supply chains may also have some bearing on consumer behaviour this year.
So, what does this all mean for your business should you engage in Black Friday promotions or hold your nerve and maintain your retail prices. Black Friday has many pros and cons.
Pros
1. An increase in traffic and sales
Consumers have become savvier due to Black Friday and Cyber Monday and are actively seeking out bargains during this period. Black Friday and Cyber Monday focuses shoppers on a set period of time meaning more sales and traffic for your business.
2. A chance to offload stock prior to Christmas
Black Friday is a great opportunity to clear older stock and introduce new lines prior to the Christmas rush. This is particularly key if your business is in electronics or fashion.
3. New customer attainment
Finding new customers can be tricky and costly. Black Friday and Cyber Monday give you an opportunity to get in front of new customers who you can then retain if their experience is positive then they will come back to you.
4. Incremental sales
Customers are well trained and are keen to purchase around Black Friday. They may be attracted to your business due to discounts however they may go on to purchase full price items.
5. Fulfilment of orders prior to Christmas
With ongoing issues with delivery getting sales in early may prove beneficial to retailers as you can ensure customers receive their items in good time prior to Christmas.
Cons
1. Pressure to discount
As I’ve already mentioned customers have grown to expect discounts around Black Friday and Cyber Monday. This may be difficult for some retailers to achieve.
2. Negative impact on sales margins
Although sales are likely to go up, profits will go down. You need to consider whether offering discounts is actually commercially viable. If not then you may wish to withdraw from offering deductions however, will your competitors be offering a promotion?
3. Increase in returns
Black Friday can encourage impulse purchases, the problem is whether customers will then return the items.
4. Overcrowded competitive marketplace
Lots of retailers will be talking about Black Friday so getting your voice heard above all your competition can be problematic.
5. Delayed sales as customers are waiting for discounts
We’ve all grown to expect discount around Black Friday so teasing customers to purchase outside of this period will be tough. Its likely that you will see a drop in sales running up to Black Friday which will have a negative influence on your bottom line.
The Black Friday and Cyber Monday phenomenon looks like its here to stay despite the difficulties it poses to retailers. Its important to consider all the pros and cons before embarking on discounting your products. The impact on margins is easier for a larger retailer to absorb but for smaller businesses it may prove challenging. But equally the opportunity to acquire new customers during this period is beneficial. The key to success is ensuring that promotions are carefully managed to ensure that margins are protected whilst taking advantage of the increase in customers looking for a bargain.
If you’d like to talk to me about your marketing prior to the run up to Christmas or anything else, feel free to get in touch kiesha@iconmarketingcomunications.co.uk 07979940526.